A River May or May Not Run Through It: FEMA Pushes the Sale of Insurance Policies That Might Not Cover Recent Flood Damage

The Federal Emergency Management Agency, in another glaring example of bureaucratic incompetence, has been confusing property owners along Missouri River Basin.

By enthusiastically pushing the sale of flood insurance policies that may or may not cover damage from the river flooding that began this month, insurance companies and customers alike are bewildered.

Insurers are claiming FEMA, which administers the national flood insurance program, has been urging insurance agents to sell the policies although they contain deadlines that appear to exclude the Missouri River flood damage.

The federal officials explain that some of the damage along the river might still be covered under the program's convoluted rules, but how much won't be known until after the flooding is over.

"They won't give you a clear answer," said Larry Case, executive vice president of the Missouri Association of Insurance Agents. "It causes issues for agents because they get frustrated when they can't give policyholders a definitive answer."

According to The Associated Press:

“The questions primarily affect property owners who waited until recently to decide on flood insurance because their property usually doesn't flood. The extensive flooding this year - the worst since 1993 - is threatening thousands of acres that normally remain dry. The federal government has been encouraging more property owners along the river to make longer-term commitments to insurance.”

The confusion about coverage stems from a clause in policies that require a 30-day waiting period in flood insurance.

“According to FEMA, the Missouri flood officially began on June 1 so only policies bought by May 2 would have gone into effect and therefore would cover the resulting damage.”

Despite the clear confusion, FEMA continues to encourage people to buy the insurance, noting that some damage might later still be covered if it is attributed to locally heavy rains or other conditions not affected by the waiting period.

Property owners who buy the insurance would have no other choice but to wait for an adjuster to decide whether any damage is covered. Why anyone would risk this is beyond explanation.

As one would guess, many homeowners are unwilling to purchase expensive policies that come with ambiguous terms and guarantees. And the insurance companies are stuck with a product that they cannot sell because they, like the customer, have no idea what it does.

"We've got to communicate with people that you can't wait until the last minute to buy flood insurance," said Brad Kieserman, FEMA's chief counsel.

(The Associated Press Contributed to this report)